5 Simultaneous microeconometric models with censored or qualitative dependent variables

Abstract

Publisher This chapter defines two classes of simultaneous limited dependent variable regression models. The distinction between these two classes depends on whether the structural economic model is simultaneous in the latent or observed dependent variables. This distinction corresponds closely to whether or not the censoring mechanism itself acts as a constraint on individual agents' behavior. Type I models, which form the first class, are defined to be simultaneous in the underlying latent dependent variables. As a result, there exists an explicit and unique reduced form in the latent dependent variables under the usual identification conditions. In Type I models, individual behavior is co..